Apogee Enterprises, Inc.
) delivered first-quarter fiscal 2014 earnings of 14 cents per
share, more than double than 6 cents per share earned in the
prior-year quarter. However, earnings fell short of the Zacks
Consensus Estimate of 17 cents per share. The year-over-year rise
was driven by improved volume, mix, productivity and pricing in
Architectural Glass, and improved margins in Architectural
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Total revenue improved 16% year over year to $179.3 million in
the quarter, surpassing the Zacks Consensus Estimate of $174
million. The improvement was driven by growth in all segments,
particularly Architectural Glass and Architectural Services.
Cost of goods sold increased 16% to $143 million in the quarter.
Gross profit improved 17% to $36.4 million. Gross margin in the
quarter remained flat at 20%. SG&A expenses went up 5% to
$30.3 million. Operating income was $6.1 million, more than
double of $2.3 million earned in the year-ago quarter. Operating
margin expanded 190 basis points to 3.4% driven by improvements
in volume, pricing and productivity.
Revenues from the Architectural Glass segment jumped 27% year
over year to $74.8 million. Operating income in the quarter was
$1.4 million, a stellar improvement from a loss of $2.4 million
in the year-ago quarter. The segment benefited from improved mix,
volume, productivity and pricing.
Revenues from the Architectural Services segment went up 19% year
over year to $46.5 million on the back of volume growth and the
timing of project cost flow. The segment reported an operating
loss of $1 million, an improvement from the loss of $2.6 million
in the prior-year quarter helped by volume increases and
improvement in project margins.
The Architectural Framing Systems' revenues increased 5% year
over year to $44.4 million. The segment's operating income
declined 33% to $2.1 million from the year-ago quarter due to the
negative impact of a gap in timing for more complex window work.
Improved performance in the storefront and finishing businesses
was offset by a weaker window business, where revenues and
operating income were affected by an anticipated gap in the
schedule for more complex projects.
Large-Scale Optical Technologies segment's revenues inched up 1%
to $19.5 million. Operating income in the reported quarter was
$4.7 million, down 11% from $5.3 million in the year-ago quarter.
Volume growth and a positive mix of higher value-added products
were offset by investments in promotion and for growth in new
geographies and markets.
Apogee ended the quarter with cash and short-term investments of
$69.7 million compared with $85.6 million as of fiscal 2013 end.
Long-term debt amounted to $20.8 million, in line with fiscal
2013 end. Cash used in operating activities was $2.2 million
during the first quarter of fiscal 2014 compared with $7.6
million in the prior-year quarter.
Consolidated backlog at the end of the first quarter was $302
million, up from $298 million at the end of fiscal 2013 and $269
million in the prior-year quarter. Approximately 79% of the
backlog, or $238 million, is expected to be delivered in fiscal
2014, and the balance 21%, or $64 million, in fiscal 2015.
For fiscal 2014, Apogee expects earnings to be in the range of 90
cents to $1.00 per share on the back of high single-digit revenue
growth. Gross margin is anticipated to be at least 22% in fiscal
2014. Geographic growth in the domestic markets and introduction
of new products are expected to contribute to revenue growth.
Furthermore, improvements in volume, mix, project margins and
operating leverage will drive earnings.
Capital spending for fiscal 2014 is projected in the range of $40
to $45 million as Apogee continues to invest in growth,
productivity and product development capabilities, including the
new architectural glass coater.
Apogee targets $1 billion in revenues by the end of fiscal 2016.
Apogee also expects to achieve 10% operating margins on the back
of its focus on productivity and operational improvements.
Apogee's backlog remains strong, which bodes well for its future
performance. The company intends to add new capacities and fund
acquisitions. Focus on operational improvements, expansion in new
geographies and markets, and new product launches will fuel
Apogee's revenue growth going forward.
Apogee has faced challenging commercial construction market
conditions so far. However, the U.S. construction is finally
stabilizing and is on the road to the much-awaited recovery,
which looks promising for Apogee.
However, macroeconomic conditions might continue to be a headwind
for Apogee. Moderating global economic growth and uncertainty in
the global economic scenario can limit Apogee's near-term revenue
Apogee Enterprises is a leader in technologies for the design and
development of value-added glass products, services and systems.
Apogee retains a Zacks Rank #3 (Hold). Other stocks in the same
industry with favorable Zacks Rank are
Mueller Water Products, Inc.
), with a Zacks Rank #1 (Strong Buy), and
Century Aluminum Co.
Kaiser Aluminum Corporation
), both carrying a Zacks Rank #2 (Buy).